Is China the future for premium cigars? If the question is about sales, the answer is plain and simple YES. The demand for luxury items is growing at an unseen rate. But what about being the future for cigar production? The Chinese have been in the cigar game for more than a century. And that isn’t strange. Several Southeast Asian countries have a tradition with tobacco going back centuries.
Tobacco came to China in 1570. It came from The Philippines where it was introduced earlier, just like Indonesia. Tobacco is still grown in these countries, just as in Sri Lanka. But most of the tobacco isn’t for premium cigars though. It’s often used in dry-cured shortfiller cigars. China grows tobacco as well, in almost every province. And according to the China Industrial Tobacco Company the Chinese cigar factories roll more than 250 million handmade cigars every year. All of which are for the domestic market. If those numbers are true, China is the largest manufacturer of handmade cigars in the world.
But will we ever see premium handmade cigars from reputable brands coming from Asia. We think the answer is yes. Recently Tabacalera, a division of Altadis, and the Great Wall Cigar Factory collaborated. The VegaFina Fusion Edition is made at the Great Wall Cigar Factory in Shifang. But the blend does not contain any Chinese tobacco. Yet, we think it is the first of many premium cigars for the global market that will be made in South East Asia.
Last year Altadis was sold to Allied Cigar Company. Even though it’s not confirmed, but it appears that Chinese billionaire Alvin Chai is behind it. The company is registered in Hong Kong. So the links with China are there. That’s why it’s not surprising that one of Altadis’s brands is the first to collaborate with a Chinese cigar factory. Due to the low wages, it is even cheaper to roll cigars in China than in the Dominican Republic, Honduras, Nicaragua, or Costa Rica.
Packaging, swag and Tobacco
A lot of cigar boxes that we see at our local shops are made in China. Most of the swag and branded items we see are made in China. So the cigar industry is already working with the Chinese On that level. And if it’s cheaper to send tobacco to China, and send the finished product back to America, Europe, and other parts of the world, it makes sense to produce cigars in China as well. As long as certain quality standards are met.
A few years ago, one particular cigar manufacturer mentioned to Ministry of Cigars he was investigating moving production to India. His words were that ‘if I can teach people to roll cigars there, it would save a lot of money, and I can sell my cigars for a more consumer-friendly price.’ We don’t know what eventually happened to the idea, and it if it will ever happen. But it shows that manufacturers are open to the idea of moving production to Asia.
As for Chinese tobacco in cigars, we see a future. Not as puros, with just Chinese tobacco. But as part of the blend, either as filler or binder, there is definitely a future for Chinese tobacco in premium cigars. Just like there is for Indonesian tobacco. China is a large country, with many micro-climates. Some of them are very suitable for tobacco plantations. Tobacco from the island of Hainan for example is a prime example of tobacco that could be used as part of a premium cigar blend.
Who will move?
If the answer to the question if production will move to Asia is yes, the next question will be: what brands? Because many brands are committed to the country they are in. For example, the Eiroa family, both Christian and his CLE and his father and brother from JRE tobacco will never abandon Honduras. The same goes for Kafie 1901. The way brands such as My Father Cigars, A.J. Fernandez, Perdomo, Padron, Oliva, Joya de Nicaragua, and many others are committed to Nicaragua speak volumes as well. Fuente, La Flor Dominicana, Tabacalera El Artista, PDR are a few names that will never leave the Dominican Republic. Especially those who own factories will stay put.
Then who will potentially move their production, or a part of it, to South East Asia? We foresee more brands from the Altadis portfolio coming from China. Scandinavian Tobacco Group, the parent of General Cigars, has a big operation in Indonesia. And both are the kind of companies that like to save pennies. A CAO China, CAO Indonesia, and a CAO Philippines series isn’t unthinkable. Made in these countries, but also utilizing some local tobacco in the blend.
Private labels coming from China or Indonesia is also a possibility. We wouldn’t be surprised to see a Chinese made Gurkha in a few years. They are the kind of company that is daring enough to pioneer that market. Of course, this is hypothetical and except for the VegaFina Fusion Edition, no collaborations are announced. But we expect that this isn’t the last premium handmade cigar from a reputable brand that will come from South East Asia.